Groupon

CHICAGO/SAN FRANCISCO, Mon Nov 12, 2012 – Groupon and its compatriots in the much-hyped daily deals business were supposed to change the very nature of small-business advertising. Instead, it is the daily deal vendors that are racing to change as evidence mounts that their business model is fundamentally flawed.

Groupon last week reported another quarter of disappointing earnings as its core business stagnated, sending its stock down 30 percent to an all-time low of $2.76. Its biggest rival, Living Social, is piling up losses, and part-owner Amazon.com earlier this month recorded a quarterly loss after writing down its Living Social investment.

Both companies are racing to diversify, venturing into more generic ecommerce areas like off-price sales through ventures such as Groupon Goods and LivingSocial’s Shop. Meanwhile, upstarts are developing new variations on the discount coupon theme.

“It’s clear that they need to have other models besides the email daily deals business,” said Aaron Kessler, an analyst at Raymond James. “The problem is that a lot of these newer businesses have lower margins.”

Critics say the torrid growth that enabled Groupon to go public at $20 a share just a year ago was fueled by merchants buying into a new type of marketing that they didn’t fully understand. The discounts offered through the Groupon coupons have turned out to be costly, and the repeat business they generate uncertain.

Groupon said the new service lets restaurants, salons and spas, retailers and other local businesses accept credit card payments at a lower rate than other providers.

Any merchant that runs a daily deal with Groupon in the United States can sign up for the payments service, the company added.

Groupon will charge 1.8 percent for MasterCard, Visa and Discover cards, on top of a 15 cent fee per swipe. For American Express cards, it charges 3 percent plus the 15 cent fee.

Groupon is the world’s largest daily deal company, offering discounts on local services. But the company is branching out into other businesses, such as discounted product sales, and now payments.

Groupon shares rose 7.5 percent to $5.04 on Wednesday. The stock has lost about three quarters of its value since the company went public last year.

The payments business has become crowded in recent years. Square, a start-up backed by Twitter co-founder Jack Dorsey, has won small merchants as customers by offering easy credit card acceptance through a small swipe device that plugs into smartphones.

CHICAGO, Tue Aug 21, 2012 – Barclays Capital downgraded Groupon Inc. to “underweight” from “overweight” and cut its price target on the stock as the company faces a slowdown at its core daily deal business, forcing it to rely on its lower-margin discount business.

Shares of the company looked set to open down 2 percent on the Nasdaq on Tuesday morning.

The company is also making changes at the top, but investors have been skeptical that CEO Andrew Mason has the ability to turn the business around.

“The sale of products or “Groupon Goods”, which practically didn’t exist two quarters ago and represented an immaterial amount of first-quarter sales, represented the vast majority of incremental sales growth in the second quarter,” Barclays analyst Mark May said.

A continuation of this trend could hurt Groupon’s margin profile, he added.

Groupon often takes inventory risk with its Goods business, which was launched in the third quarter of 2011, as it buys products in bulk at a discount and sells them to customers at higher prices. However, Groupon Goods may not be as profitable as its original daily deals.

SAN FRANCISCO, Fri Aug 17, 2012 – Groupon Inc. shares slumped to a new low on Friday after an analyst raised concerns about the future effect of slowing growth on the daily deal company’s large cash position.

Groupon shares were down 8.0 percent at $4.60 in early afternoon trading on Friday, after sinking to a record low of $4.51 earlier in the day.

The declines added to a swoon in recent weeks that has enveloped not just Groupon, but several consumer Internet and social media stocks including Facebook Inc./and Zynga Inc.

Groupon’s losses on Friday came after Evercore Partners analyst Ken Sena downgraded shares of the largest daily deal company and set a $3 price target on the stock.

Groupon missed Wall Street’s second-quarter revenue expectations earlier this week. Gross billings, which reflect the money Groupon collects from consumers who buy its daily deals, fell during the second quarter, the company also said.

“We see potential for future cash burn assuming billings declines persist,” Sena wrote in a note to investors.

Groupon has more than $1 billion in cash and the company generates a lot of working capital because it collects money upfront from customers who buy its vouchers and it then takes at least 30 days to pay merchants their share.

NEW YORK, Thu May 17, 2012 – Groupon Inc. Chief Executive Andrew Mason and the company’s other founders are planning to keep their shares in the company after a trading lock-up expires on June 1.

Groupon’s lock-up expiration will allow some pre-initial-public-offering investors to sell their shares, and analysts say that the approach of the expiration has put Groupon’s stock under additional pressure.

“We have no intention to sell,” Mason said during a webcast of an investor meeting on Thursday, adding that he believes in the long-term future of the online coupon company.

Groupon shares were down about 6 percent or 80 cents at $12.25 on Nasdaq in morning trade. But Clayton Moran, an analyst for Benchmark Co, said this was due to the volatile nature of the stock rather than anything Mason said.

“To hear that a third of the shares are not going to be sold is somewhat encouraging,” the analyst said.

The fact that Groupon sold a small chunk of its equity in the IPO makes such expirations more important.

CHICAGO, Tue May 15, 2012 – Groupon Inc. shares jumped 22 percent in premarket trade on Tuesday after the daily deals company posted its first quarterly profit as it signed up more customers and merchants.

“While billings, revenue, margins, and guidance all met or exceeded, signs of accelerated North American revenue shows that the company’s technology efforts around personalization and, to a lesser extent, mobile and rewards, are paying off,” Evercore Partners analyst Ken Sena wrote in a note.

Sena raised his price target on the stock to $17 from $15 and kept a “buy” rating.

Analysts have been particularly concerned that growth was slowing in Groupon’s relatively more mature North American business. However, Groupon said on Monday North America revenue rose 33 percent for the first quarter — the strongest growth in a year.

Ditto.me said, without disclosing financial details, that it would terminate its previous services at the end of the month, but did not disclose what its future endeavours would be as part of Groupon. The company will also remove its application from Apple’s and Nokia’s stores.

Ditto’s service, started a year ago, facilitates the discovery through an application for mobile phones of new places such as restaurants and film theaters.

Groupon was established in 2008 and provides a daily offering of deals to its customers. It has approximately 10,000 employees. The company’s headquarters are located in Chicago and has an office Palo Alto, California as well as regional offices in Europe, Latin America, Asia and other territories.

The buyer carried one of the biggest Internet initial public offerings (IPOs) in 2011 which valued the company at $10 billion. Following the revision of its fourth-quarter 2011 results at the end of March this year, the company said that its net loss stood at $65.4 million while its revenue amounted to $492.2 million.

NEW YORK, Thu Apr 12, 2012 – Groupon Inc., the online coupon company that floated just months ago in the strongest IPO in years, has had recurring accounting problems that critics say show a need for more financial sophistication on its board.

Groupon revised its fourth-quarter results last month, its first results posted as a public company, trimming revenue by $14.3 million. The company also said it found a material weakness in controls over its financial statements.

Fast-growing Groupon has said the latest accounting problems stemmed from a move into higher priced coupons, which led to more customer returns and refunds than anticipated.

The company sells discounted coupons online, keeping part of the money that customers pay for the coupons, with the rest going to participating merchants.

Groupon has asked an external auditor to look into the causes of its internal control weakness and has said it will beef up its own finance staff.

But corporate governance experts questioned the financial background of the Groupon board’s audit committee, which is supposed to oversee both its auditor and the company’s own accountants.

Groupon spokesman Paul Taaffe said the audit committee has met regularly to address accounting issues since the company discovered in February that the refund rate had increased.

Committee members “were in contact with each other, the audit firm and management continuously,” he said.